Richard E. Stearns: 20/20 Vision in a Myopic World

Richard E. Stearns is president of World Vision U.S. (a nonprofit, nondenominational Christian humanitarian relief and development organization, founded in 1950, based in Federal Way, Washington. World Vision is the largest privately funded Christian relief and development organization in the world, serving more than 60 million people in nearly 100 countries, including the United States.

World Vision devotes about 30 percent of its resources to disaster and crisis relief (e.g., Kosovo, Hurricane Mitch, East Timor) and 70 percent to longer-term development with the goal of moving people out of poverty into self-sufficiency. World Vision’s development programs address five basic challenges: (1) food (e.g., dependable agriculture and animal husbandry), (2) water (e.g., clean and sufficient water, sanitation), (3) literacy and education, (4) health care, and (5) micro-enterprise (e.g., economic livelihood, jobs). World Vision’s vision, values, and activities grow out of its deeply Christian sense of justice and compassion.

Rich Stearns (B.S., Cornell; M.B.A., Wharton School, University of Pennsylvania) began his professional career in marketing with the Gillette Company. From 1977 to 1985 he worked at Parker Brothers, a major toy and game company founded in 1883 and best known for such games as “Monopoly,” “Sorry,” “Clue,” and “Risk,” becoming president in 1984. In 1985, he became a vice president at The Franklin Mint and then joined Lenox in 1987 as president of Lenox Collections. In 1995, he was named president and CEO of Lenox Inc., overseeing three divisions, six manufacturing facilities, 4,000 employees, and $500 million in annual sales. In June of 1998, Stearns became president of World Vision.

◊ ◊ ◊ ◊ ◊

Ethix: Before we get to World Vision we’d like to hear about your experiences at Parker Brothers and Lenox. It seems like a classic parlor game like Monopoly, or fine china crafted at Lenox, would be more or less immune to technological change and challenge.

Richard E. Stearns: Actually, my first assignment at Parker Brothers in the late 70s was to introduce their first electronic game. The electronic revolution had begun to hit like a tidal wave and our cardboard parlor game business was threatened. Parker Brothers, Mattel, and others began to use microprocessors in toys and games, first for sounds or voice and then increasingly complex applications.

I was responsible for the electronic games category and within three or four years the company had doubled in size with its hand-held electronic games. Yet, Parker Brothers management was still not really tuned in. We were still trying to blend the new with the old, merely applying electronics to a board game.

About 1981, I came up with a business plan for video games. The world of the future was going to play games on a video screen, not a cardboard board, I argued. The nay sayers opposed the plan, saying it was far outside our expertise, that we were not a technology company like Sony or Texas Instruments. My answer was that we were an entertainment company and those technology companies were going to need entertainment suppliers. We understood games and how people have fun together interactively.

My strategy was not to make the “record players” but just the “records.” We would acquire licenses for Star Wars, James Bond, Spider Man, and so on, and then produce software for different formats — one Star Wars cartridge for a Calico player, another for Mattel, another for Atari. In just one year we went from 130 million to 260 million in sales. At one point in the early 80s, we were the largest software-only company in the world, bigger than Microsoft!

Then the video game market temporarily collapsed due to a market oversupply. General Mills couldn’t stand the market volatility, ignored our arguments that computers were the next big thing and that electronic games would rebound big time, and rashly decided to divest all of their toy companies. I left in 1985 when Parker Brothers was divested.

Were you able to take any of your technology ideas over to Lenox?

Ironically, I went from this very high-tech, cutting edge business to the lowest of low tech, making pottery out of clay and firing it in a kiln — what I call “the world’s oldest profession.” Of course Lenox depended on computers and database management and all of that. And, we made constant efforts to bring our ancient craft into the 20th century. We had elaborate computer control mechanisms for regulating kiln temperatures.

When I began, women sat at benches with pallets of ceramic paint and wooden popsicle-type sticks, dipping them in orange first, to carefully dot a pattern on a plate. Then they would pick up a blue popsicle stick and dot the blue. Then some gold was hand applied with a little brush. That’s how our signature china pattern “Autumn” was manufactured! Eleven years later, our workers had foot pedal-operated pneumatic guns and they would just go “bang, bang” to apply those classic dot patterns. We were also developing a robotic system to do it all. In just eleven years we went from wooden sticks to robots.

Then you left the for-profit corporate world and came to a completely different situation at World Vision. How do you explain that move?

For me it was an ethical decision. We often think of ethics only in terms of what we do, the acts we commit. We don’t talk nearly enough about the ethics of omission, when we choose not to do what we ought to do with our resources, our lives, our gifts and skills. Princeton ethicist, Peter Singer, has made the radical, controversial argument that if we know that a child in the world is dying, have it within our power to prevent it, and then choose not to do so, it is morally equivalent to killing that child.

How is your experience in executive leadership different at World Vision, a nonprofit with an altruistic mission, from what it was at Parker Brothers or Lenox?

The similarities are that they are large, complex corporations dealing with marketing, revenue, human resources, information technology, and so on. At a deeper level, there’s a very different motive behind our work. In a for-profit corporation the end is profit, financial return, shareholder value. In a not-for-profit like World Vision, the end is service. Money is only a means to that end. So, the end and means are reversed.

At Lenox, we had a lot of high-minded talk about the artistry and beauty of our china, but the bottom line was making money for the shareholders. In the not-for-profit world, the means usually involve money, but the ends are changed lives or changed communities. This fundamental difference influences the behavior of the people you work with.

In a nonprofit, people are not obsessed with the financial aspects of the business — something you might actually want them to be a little bit more concerned with! But, they are obsessed with the end service benefit and that’s basically good because it gives you a very high level of motivation.

At Lenox, when the fiscal year got tough, sales were down, the pressure was on from the parent company, and everybody was uptight, I can remember saying “Guys, relax, it’s only dishes!” At World Vision, when times get tough and Hurricane Mitch hits, it’s lives not just dishes. It’s not unheard of to have tears in our meetings over the suffering and loss of life people are experiencing. How are we going to respond, how can we help?

What about recruiting people to work for your organization? Idealism is down, wages out there are up. How do you manage to recruit good people in this context?

The 90s saw an unhealthy, unwholesome attitude arise that if you haven’t started your own dot.com company and made a financial killing, you are not significant and you are missing out on the party. Life’s objective was to get rich quick.

Success may indeed mean doing well financially and rising to the highest level in your profession, but what is your motive? Is it just “for me”? Or do you strive for career success so that you can make a difference in the world for good? What we’re missing today is the “so that” — and as a result there are fewer and fewer people willing to make sacrifices.

It is hard for us to recruit people. We just concluded a nationwide search for a senior vice president of marketing. We found someone who is at a fairly high level at an international banking institution. The job we offered him will give him a 70% pay cut. He’s just reached his prime when he could make some serious money, but he took our job. Now, he’s trying to buy a house here on this reduced salary and is really feeling the pinch of sacrifice for his decision. Had he stayed where he was, he would have soon been making seven figures and putting away a lot of money. He’s got children to put through college. How many people are willing to do what he did?We don’t talk nearly enough about the ethics of omission, when we choose not to do what we ought to do.
How many are willing to choose lower-paying professions, like school teaching, because they want to help people? Our society depends on a certain number of altruistic people who decide that making lots of money is not important and accept some sacrifice and hardship.

Intense competition is standard in the business world. Is there a similar competitive drive to be the biggest and best humanitarian and relief organization?

We wrestle with this! The charity world is competitive and aspects of it are unseemly. It’s perverse in a way, but tragic crises, such as Hurricane Mitch or Kosovo, provide opportunities for relief and development organizations. When the crisis hits, the marketing department comes together for a “swat team” meeting on how we will respond. How do we get on CNN or ABC as fast as possible with our message? You can’t help but say, “Wow, World Concern got on the news tonight! How come they did and we didn’t? What’s with our PR department?” So, there is competition, but our basic motivation is to get revenue so we can help people.Our society depends on a certain number of altruistic people who decide that making lots of money is not important
On the other hand, there is probably more cooperation than I saw in the for-profit sector. We get together regularly with other NGOs (Non Government Organizations). We share resources and strategy. For example, we raised money for the recent mudslides in Venezuela and gave it to the Adventist Relief organization because they’re operational in Venezuela and we don’t have an office there. We often cooperate with the Red Cross, Unicef, and a lot of other organizations. However, it would be misleading to say there isn’t any competition in the nonprofit world.

How about your relationships to foreign governments? Some businesses have been pressured to bribe officials in some countries. Have you ever had any problem like this?

We serve in other countries by permission of their governments and we regularly work with their agencies and institutions. The only country where we’re operating illegally is Sudan. They do not allow any relief organizations, but the humanitarian crisis is so severe that we must cross the border and feed the people. We have a rigorous set of ethical standards that prohibit us from giving bribes and payoffs to government officials. If that is the only way we can get into a country, we do not go in. We will not compromise on this.

Governments are, by and large, favorable to organizations like ours because we’re providing resources they know they need, at no charge. On my visit to the Philippines last spring with Jimmy Carter on a Habitat for Humanity building project, three of the Philippine presidents came out to our project site, all of them saying how grateful they are for the work of Habitat for Humanity and World Vision.

The Honduran president welcomed us recently and thanked us for doing things that his government simply does not have the budget resources for — getting to the most remote areas of his country to help those hit by Hurricane Mitch. Certainly there are some corrupt and hostile governments such as Sudan, and there are other difficult places to work, but in general we have very positive relationships with foreign governments.

Technology is bringing vast changes to the American business scene. How is it changing the world relief and development “business”?

Medical technology is creating new, more accessible and affordable cures or remedies for diseases we face. Vaccines and healthcare techniques are changing the face of community development. Obviously, various other technologies play important roles in drilling wells, construction, energy, transportation, small industry, and so on.What the internet can do for a country like Ghana may be totally different than what we have in the West, and we do not yet see clearly what this will be like.
Information technology is, of course, the big story in advanced economies. However, at this stage, it has far less impact on poor countries. Somalia is not going to become a big customer for Amazon.com anytime soon! At a “digital divide” conference recently, there was talk about connecting the developing world to the Internet. But, what good is it to connect people to the Internet when their own language is not available? Most Internet resources have been created for the developed world, in its major languages, to serve its needs and desires. A village in Ghana certainly wouldn’t value online shopping opportunities for cars, CDs, or luxury goods.

Where the Internet might become valuable, however, is in connecting a village in northern Ghana to one in the south so that they can discuss their mutual problems and possible solutions. Maybe one community wants to share some strides in health care or agricultural development with another community. Maybe one area raises goats, another grows crops, and the Internet will help bring them together to trade. What the Internet can do for a country like Ghana may be totally different than what we have in the West, and we do not yet see clearly what this will be like.

Probably the biggest impact of information technology right now is on our own communications. World Vision has about 10,000 employees and is working in almost 100 countries around the world. We are now all linked together on our Intranet. When I go to work in the morning I often have e-mail from Africa, China, and Latin America. So, the internal communication of our organization around the world has improved tremendously. We may have five million dollars invested in Malawi projects, for example. We now can know what’s happening there and communicate daily with our partners and workers. This makes us much more effective and responsive than we were ten or twenty years ago.

Finally, information technology is helping us at the very heart of our “business” — linking people to people. For example, World Vision is well-known for its child sponsorships. Ten years ago, we still trekked into jungles with a camera to take pictures of each child who might be sponsored. Then, we trekked back out, licked a bunch of postage stamps, and mailed the photos to World Vision headquarters where they were pasted on folders and sent to sponsors. Today, we use digital cameras and satellite uplinks to transmit such data to headquarters, generate the photos on our laser printer, and get it all in the mail the next day to sponsors. That’s just one simple process that’s been speeded up and improved by technology.

Here is another angle: whenever we can actually fly people to a country to meet people in a village — see their suffering, hold their children, see their school in disrepair, their lack of a health clinic, their stagnant, fly-infested water supply — those visitors come back changed. Poverty is no longer just a statistic — it’s people who they got to know during a week in Honduras or Uganda. They come back with a philanthropic heart, no longer supporting a cause but supporting real people they have met. Relationship breaks almost every barrier you can think of: callousness, racism, skepticism.

Technology provides additional ways to overcome some of those barriers of culture and distance. Not everybody can get on an airplane to Africa or South America. We’re exploring what we call “community-cam.” In some of our communities we’ll have video capability to dialogue back and forth. Imagine a classroom in California and a classroom in Uganda that have an interaction time once a week.

Websites in the future may be devoted to a particular community in Ethiopia where you are sponsoring a child, so that you know what’s happening in that community week to week. There may even be a chat room with an opportunity to communicate with people over there. All of this brings a much keener interest in that sponsored child and in that community. It may trigger ideas and you may want to get friends involved. This interactivity may make a tremendous difference in the future if we use it the right way. Global community takes on a reality. People respond to what they can be involved with. The donor today wants more than just a once a year letter from somebody 10,000 miles away.

You have spoken about ethical “sins of omission.” Does that ever apply to business?

When corporations choose not to be socially responsible, when they choose to keep all of their powerful resources and not apply them to benefit humankind in any significant way, isn’t that an ethical omission?

In the relief and development business, we work with the poorest of the poor around the world. Three billion people live on less than $2 per day and twenty-three children die every minute of poverty-related causes! At Columbine High we lost fourteen or fifteen young people and the nation was horrified. It was in our headlines. Yet, 23 children die every minute around the world and it doesn’t even get in the back pages of the newspaper. Two billion have no electricity and well over one billion have no clean drinking water. These are grim statistics and the problem is far too big to ever be solved by one sector of society — not government, not church, not schools alone.

The huge silent partner in all of this is the business world, the corporate powers who have some of the greatest resources in people, technology and money, and yet have essentially chosen not to apply those resources to this global problem in a benevolent or philanthropic way to any major extent. If every corporation committed to do its part, to use some of what they have to overcome a piece of the problem, to begin diverting some resources to alleviate some of those grim conditions, it would change the world.

Can you give some more specific ideas? What can the business community do?

When corporations choose not to be socially responsible, when they choose to keep all of their powerful resources and not apply them to benefit humankind in any significant way, isn’t that an ethical omission?
The first thing most people think of is simply donating money, and that is one important response. American business is doing fabulously well at making money. A great deal of the world’s need can be helped through such donations. But, we get very little of our cash funding from corporations. Cash gifts from corporations contributed less than $5 million to World Vision’s $407 million in revenue last year. Naturally, we wish we could encourage corporations to give more, not just to World Vision, but to other similar efforts.

A second possibility is gifts-in-kind. Last year, World Vision received about $125 million in gifts-in-kind from corporations. That included everything from Bugs Bunny t-shirts donated by Warner Brothers to vitamins and pharmaceuticals donated by the big drug companies. These gifts-in-kind are then distributed in a variety of ways to international as well as domestic partners. They are good for the corporation because they get a special tax consideration, and they are good for the charity because we get good quality merchandise, which we can use in an effective way. We appreciate these gifts. This is a second avenue.

A third possibility may be the most exciting of all. We like to develop projects with specific companies. For example, Nike has been criticized for their past labor practices in developing countries. They’ve become very sensitive to this criticism over the years. We’ve begun to work with Nike. We told them that if they are serious about improving the living standards of workers in their factory communities, we may be able to help. They are good at making athletic shoes, we’re good at working with communities. We now have a fledging partnership with Nike in China at several of their factories. One of these factories has 70,000 workers! We are providing basic education and vocational training for these factory workers, most of whom are women. Most come to work at the factory for nine months at a stretch and live in big dormitories. We are providing them with skills that will serve them well when they return to their communities.There are tremendous opportunities for partnerships like this, but first corporations must choose to have goals beyond just maximizing shareholder value.
There are tremendous opportunities for corporations to form partnerships with non-profits to improve the lives of the people wherever they operate around the world. Another example: the CEO of Unocal has been on a top 10 “bad guy” list because Unocal continues to work on an oil pipe line in Burma/Myanmar, widely considered one of the most oppressive governments and violators of human rights in the world. All the criticism caused Unocal to look at its human rights stance and create a whole new mission statement, which commits them to “improve the lives of people” wherever they operate. Unocal is now building schools, healthcare clinics, and genuinely trying to leave the Burmese people better off than when Unocal got there. There are tremendous opportunities for partnerships like this, but first corporations must choose to have goals beyond just maximizing shareholder value.By world standards, we are all wealthy in this country. We should all be philanthropists. The world needs it. We ourselves need it.

We could use some strong leadership here from corporate CEOs. You were there once. What needs to happen?

As a CEO in the corporate world for over 23 years, I was doing my part privately in terms of writing checks and making gifts to charity, but I wasn’t doing much publicly in my role as CEO. Those two parts of my life existed separately. The goal of Lenox was not to help the poor around the world, but to make money for its shareholders. I was single-mindedly focused on that. Like most corporations, we had a small charitable fund that we distributed to community causes, but I never really thought about what our corporation could do to impact the world in a significant, positive way. As I look back on it, one reason is that I didn’t feel I had permission from the shareholders or owners. I didn’t feel it was my job.

Maybe there is a parallel here in the way corporations have related to the environment. For many years all the incentives in business were to increase profits; none had to do with stewardship of the environment. Only when governments said there will be penalties if you trash the environment did corporations change to become environmentally sensitive.

Today, we need a similar kind of shift so that corporations are held accountable for their impact, positive or negative, on the communities in which they work, all over the world. My environmental example does not mean that I think government regulations are the best way to structure this accountability! If we had the same degree of humanitarian and social concern that we are now developing for the environment, it would unleash a tremendous force in the world for good. Corporations are ubiquitous, they’re in every country, they have tremendous resources. If just a small portion of those resources were channeled to some of these positive humanitarian ends there would be a tremendous change.

Is the commitment to charity growing or diminishing among Americans in this booming economy?

Some things are very encouraging and some are discouraging. Statistically, charitable giving as a percent of income is down and has been down almost every year for the past twenty years. That is shameful in this wealthiest civilization in human history.

Last November I ran a big ad, “An Open Letter to Pacific Northwest Millionaires,” in the Seattle Times. My basic message was: Congratulations, you’ve made it, you’ve arrived, you’ve accomplished some tremendous things in your profession and now you have all this money. Now, what are you going to do with it? (I tried to be as polite as possible, not judgmental or negative.) There are tremendous opportunities for you to find fulfillment by helping someone else with your wealth, influence, and abilities. We described World Vision’s projects around the world and some opportunities to invest in very tangible water and agriculture projects.

We created a special website and phone number for those who wanted to contact us. We got several hundred hits at our website — but no phone calls. Millionaires were not lined up in front of World Vision the next morning to give their money away. Still, it may have provoked some thinking and that was really the goal.

Part of what we need to do is nurture and assist this charitable intent within those who already have it and know it. The rest of our task is “preaching to the unconverted” — that it is just a good life discipline to regularly give away a portion of our wealth (including our expertise and energy) — to help somebody else. By world standards, we are all wealthy in this country. We should all be philanthropists. The world needs it. We ourselves need it.

Ethix is an online publication of the Center for Integrity in Business in the School of Business and Economics at Seattle Pacific University. Ethix provides illustrations of business ethics challenges through positive examples of best practices and exemplary leadership. More»